How We Help
When we begin working with clients, our analysis begins with behaviors and beliefs around money. Once we understand those – and the couple establishes an understanding with one another – we can then move on to help them couple work together to establish financial goals and build a workable financial plan. With goals in place, we develop a cash flow projection based on those goals, and then consider resources and the investment strategy. Wealth management is an extension of the comprehensive financial plan. For our wealth management clients, we implement the plan and provide ongoing investment management and planning advice.
Our planning services include comprehensive financial planning, portfolio design and special projects. Each is detailed below.
Comprehensive Financial Planning
Comprehensive financial planning as practiced by our company is a multi-faceted process that is centered around financial goals. Some common goals include the following:
- Educational needs
- Large purchases, such as a vacation home
Often, the first step in working with clients is assisting them in determining exactly what their goals are. Once this is done, we move on to the more technical aspects of the plan, which can include:
- Goal-based planning
- Risk management and insurance planning
- Tax planning
- Estate planning
The goal-based planning involves establishing a plan, including necessary savings and assumed return needed to meet the financial goals the client has established. The plan can be fairly complex, including tax, inflation and investment return assumptions, as well as stress testing in addition to straight-line growth projections.
Risk management also plays a large role in the planning process, and insurance is one of the primary vehicles used in risk management. If assets and income are integral to a successful plan, and an unexpected event puts either at risk, appropriate coverage can help reduce or eliminate this risk. As fee-only advisors, we do not sell insurance, nor do we receive referral fees – thus, if we do suggest additional insurance, our sole motivation is our belief that it is best for the client.
The last two facets often addressed in a comprehensive financial plan include tax and estate planning. Both elements of a plan are designed to minimize the tax impacts and ensure that a client and his or her heirs maximize after-tax wealth.
The financial plan provides a general recommendation of the type of portfolio a client needs, based on the client’s risk tolerance and return needs. The general recommendation is what is known as a portfolio allocation, which illustrates how investments should be allocated to specific segments of the market. Some examples of segments include Large Cap U.S. Growth stocks, Foreign stocks in developed markets, the U.S. bond market and so on.
In portfolio design, we take the recommended allocation and use it to formulate an investment policy statement which sets the overall investment strategy. From this, then we formulate the client’s specific investment recommendations. Specific considerations within the investment policy statement typically include:
- Risk tolerance, including the ability and willingness to take risk
- Return needs as outlined in your comprehensive plan
- Tax considerations, typically focused on maximizing after-tax returns
- Time horizon over which portfolio will fund needs
- Liquidity needs in the short-term
Once the investment policy is in place, we formulate specific account-by-account investment recommendations encompassing what should be purchased and what should be sold.